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- Washington
Washington State Debates How to Spend Income Tax Revenue
Governor and lawmakers clash over tax relief and budget priorities
Published on Feb. 22, 2026
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A day after the Washington state Senate approved an income tax on millionaire earners, Gov. Bob Ferguson said he's still not satisfied with the bill. He's pushing for more tax relief for lower-income families and small businesses, while lawmakers are seeking a balance between tax cuts and funding state priorities.
Why it matters
The debate over how to spend the revenue from the proposed income tax highlights the ongoing tension between providing tax relief and funding critical state services like education. As lawmakers work to finalize the bill, they must navigate these competing priorities and find a compromise that meets the needs of both taxpayers and the state budget.
The details
The income tax bill approved by the state Senate includes provisions to devote a sizable chunk of the resulting revenue to tax relief, but does not have a mechanism to lock in money for public schools. Gov. Ferguson wants to see $1 billion in small business tax relief, an expansion of the working families tax credit, and sales tax holidays. However, Senate Majority Leader Jamie Pedersen says the governor's proposals would leave the state budget out of balance, and lawmakers are seeking a middle ground where 25-40% of the income tax revenue goes toward tax reductions.
- The Washington state Senate approved the income tax bill on Monday, February 17, 2026.
- The current legislative session is scheduled to end on March 12, 2026.
The players
Gov. Bob Ferguson
The first-term Democratic governor of Washington who is pushing for more tax relief measures to be included in the income tax bill.
Sen. Jamie Pedersen
The Democratic Senate Majority Leader who is the lead sponsor of the income tax bill in the Senate. He is seeking a balance between tax relief and funding state priorities.
Rep. April Berg
The Democratic chair of the House Finance Committee who has expressed frustration with the governor's public comments on the bill rather than direct communication with lawmakers.
What they’re saying
“This bill must be laser-focused on making life more affordable for Washingtonians and continuing to improve areas like K through 12 education. We are not there yet, and we are still not close to being there.”
— Gov. Bob Ferguson (dailyfly.com)
“If he's got additional ideas, that can certainly be a consideration and part of the conversation. That's for the House.”
— Sen. Noel Frame, Lead Lawmaker on Tax Policy (dailyfly.com)
“It's really just tax shifting. Taking money out of the pockets of working families and small business owners, and then creating a program for them to have their hand out.”
— Rep. Peter Abbarno (dailyfly.com)
What’s next
The income tax bill must pass the state House and then go back to the Senate for a final vote on any changes before the legislative session ends on March 12, 2026.
The takeaway
The debate over the income tax revenue highlights the ongoing challenge of balancing tax relief and funding critical state services. As lawmakers work to finalize the bill, they must find a compromise that meets the needs of both taxpayers and the state budget.
